US diamond jewellery demand hits all-time high

JOHANNESBURG – As total diamond jewellery demand increased marginally to $80-billion in 2016, demand from US consumers ticked up 4.4% to break through the $40-billion mark for the first time.

After recording the fifth consecutive year of growth, US consumers now accounted for roughly half of all diamond jewellery purchases globally – a level not seen since before the financial crisis – in a market that remained the fastest growing, industry insight data from De Beers Group showed.

“American consumers continue to express a strong desire for diamonds, but their purchasing habits are changing rapidly. While bridal diamond jewellery remains fundamental, we are seeing both single and married women buying for themselves more frequently and more purchases being made online. Meanwhile, products such as multi diamond jewellery are becoming more popular,” said De Beers CEO Bruce Cleaver.

The report showed that demand growth from the US, supported by job creation, wage growth and a strong stock market, had offset a contraction in India, resulting in global demand for diamond jewellery increasing marginally in 2016 to $80-billion.

“However, while US demand drove global growth in 2016, it is increasing demand from emerging markets that is behind the last five years being the strongest on record. Despite some markets facing challenging conditions last year, we see this trend continuing, with improvements in demand from China and India, in particular, emerging in 2017,” he highlighted.

Demand from Chinese consumers grew 0.6% in local currency and has continued to improve in early 2017, while demand from Indian consumers started to return to more normal levels in 2017, following an 8.8% contraction in local currency in 2016 on the back of the jewellers’ strike, demonetisation and exchange rates.

While 2016 demand from Japanese consumers declined 2.9% in local currency, the strength of the yen had pushed up demand by 8.1% in dollar terms.

OUTLOOK
Unpacking the outlook for 2017, De Beers pointed out that continued sales in the US, bolstered by the more encouraging demand trends in China and India, would continue to drive global diamond jewellery demand growth, albeit marginal, in 2017.

“While the US has seen slower gross domestic product (GDP) growth in the first quarter, which generally signals slower growth in diamond jewellery demand, the outlook for 2017 is for higher consumer confidence and GDP growth,” Cleaver added.

Retailers in China expect demand to continue to grow at a slightly faster rate, in local currency, while in India, the effect of demonetisation this year proved to be less severe than anticipated, with consumption returning to more normal levels in the first quarter.